Tuesday, 31 March 2015

How AVSC Phase I vacancies were distributed (fairly) in 2003; and how Phase II vacancies were distributed (unfairly) in 2009, based on "Command Exit Model"

By Ajai
Shukla

Business Standard, 31st March 2015

Defence
Minister Manohar Parrikar has badly flubbed his first major decision relating
to the morale and cohesiveness of the Indian Army. After the Armed Forces
Tribunal (AFT) --- the military’s departmental tribunal --- wisely struck down
a discriminatory army promotion policy, Mr Parrikar’s ministry has appealed in
the Supreme Court. Instead of welcoming the AFT’s righting of a bitterly-resented
wrong, Mr Parrikar has backed the divisive notion that some branches of the
army are superior to others; and these should be favoured with extraordinary
promotion quotas and vacancies rather than going by merit alone.

In its
landmark verdict on March 2, the AFT ruled that promotions to the pivotal rank
of colonel (i.e. commanding officers of units) are unfairly biased in favour of
two army branches: the infantry and artillery. The tribunal held that “discriminatory”
army promotion guidelines of 2009 denied “equal opportunity of promotion
to all officers of all corps of Indian Army”, and ordered the reconvening of
all promotion boards to the rank of colonel held since 2008. In this review, vacancies
would be equitably allocated to arms and services, based on “pro rata”
calculation of their actual officer strength.

Since 2009,
a disproportionate share of colonel vacancies has made it possible for 60 per
cent of infantry and artillery lieutenant colonels to become colonels, while officers
from other arms and services have a success rate as low as 26 per cent. Worse, this
injustice gets extended to the higher ranks of brigadier and general, where the
vacancies for each arm or service corresponds to the number of colonels it has.

Mr Parrikar’s
worrying lack of judgment lies not just in his failure to see this injustice,
but also in the divisive argument that his appeal is based on. Attorney General
Mukul Rohatgi told the Supreme Court that the infantry alone “faces the bullets”.
Unashamedly scaremongering, he argued for faster infantry promotions because
the Pakistan army has younger infantry commanders. Rohatgi forgets that India’s
“older” commanders have won every war with Pakistan.

Mr Parrikar
should remember his army fights as an integrated whole, not as gladiatorial
infantrymen supported by lesser arms and services. Infantry units in
counter-insurgency roles are officered to a major degree by young officers on
deputation from other arms and services. The AFT judgment notes that their
combat performance often surpasses that of infantry and artillery officers. In actual
war, rapidly shifting frontlines and long-range, precision strike weaponry make
the battlefield hazardous not just for infantry and artillery, but equally for
engineering support, communications, repair and recovery of combat equipment
and logistic support like supplying ammunition, fuel and supplies. There are
few tasks more hazardous than those performed by combat engineers, which clear
minefields under enemy fire. It was for this that Prem Bhagat --- an engineer,
not an infantryman --- became the first Indian officer to win the legendary
Victoria Cross. Every Indian soldier knows this, even if Mr Parrikar does not.

Yet how can
the defence minister understand the danger of dividing officers along lines of
promotion self-interest, when the army’s own generals apparently do not. The
current dispute began when a dominant cabal of infantry and artillery army
commanders and army chiefs from 2001 to 2009 cynically subverted the recommendations
of two high-powered committees --- the Kargil Review Committee (KRC) and the
Ajai Vikram Singh Committee (AVSC) --- which recommended ways of reducing the
age profile of the Indian army.

In 1999, the
KRC --- benefiting from the wisdom of K Subrahmanyam and George Verghese --- advocated
lowering age across the army, not just for officers. Instead of recruiting
soldiers for 17 years (the practice since 1976), after which they are entitled
to a pension for life, the KRC recommended recruiting soldiers for just 7-10
years, after which they could be sidestepped into paramilitary forces or the
police. This remains unimplemented due to Home Ministry opposition.

In 2001 the
AVSC suggested ways of reducing the ages of officers at every rank and in every
arm/service --- not just within the infantry and artillery. To quickly promote
younger officers, the AVSC authorised additional army vacancies at senior ranks
--- 1484 additional colonels; 222 more brigadiers; 75 new major generals and 20
additional lieutenant generals. This aimed at reducing the age of commanding
officers (colonels) by five years to 36-37 years, of brigadiers by six years to
44-45 years, and major generals would command divisions when they were 51-52
years old, three years younger than before.

Simultaneously,
the AVSC recommended a longer-term solution to the problem of a prohibitively
steep promotion pyramid. This involved taking in more “short service
commission” officers, who mostly retire after serving five years. For those
five years, they provide the army the lieutenants and captains it needs,
without staying on to compete for vacancies at senior ranks.

From
2001-2009, the AVSC’s short-term recommendations were perverted by four
successive army chiefs --- two each from the infantry and artillery --- who distributed
most of the newly authorised rank vacancies to their own arms through a policy
called “Command Exit Model”, rammed through on January 21, 2009. This pretended
that the AVSC aimed at reducing ages in the infantry and artillery, and
presented a fallacious logic for allocating additional colonel vacancies to the
two favoured arms. The infantry was effectively handed 110 colonel
vacancies to command battalions of Rashtriya Rifles (RR) and Assam Rifles (AR),
in addition to 350 infantry battalions. Although officers from every
arm/service man AR and RR battalions, exclusionary conditions were framed to
make it almost impossible for non-infantry officers to command these units. The
infantry thus increased its colonel vacancies by 30 per cent (from 350 to 460).

To compound this advantage, it was decided that infantry
colonels would command for just 2½ years. With 460 infantry colonels needed
every 2½ years, that meant 184 colonel vacancies each year. In contrast, the
engineers and signals were arbitrarily given command tenures of 4 years, and
the logistics services of 5 years; reducing the number of colonels they needed
each year.

With an artillery chief, General Deepak Kapoor, heading the
army in 2009, the artillery was similarly favoured. Small “light batteries”,
traditionally commanded by lieutenant colonels, were elevated to “light
regiments” commanded by colonels. The artillery’s command tenure was shortened
from 3½ to just 3 years.

Internal
simmering within the army has boiled over after the AFT judgment. Initially
just 5-6 officers went to the AFT, but now dozens are approaching the Supreme
Court, adding their combined weight to the moral force of the AFT judgment. Mr
Parrikar is cornered, after having briefly appeared enlightened earlier this
year, when he promised the defence ministry would end its habit of fruitless
appeals against adverse court verdicts. He seems likely to be rudely shocked
when the Supreme Court rules on April 15.

Friday, 27 March 2015

With no movement on the contract for 126 Rafale
fighters, with the Indo-Russian Fifth Generation Fighter Aircraft (FGFA) far in
the future, and the Tejas light combat aircraft (LCA) being built in insignificant
numbers, the Indian Air Force (IAF) is making up numbers by upgrading older
fighters, often at significant cost.

The IAF is down to 34 squadrons against 42 squadrons
authorised. This would dip to 30 squadrons by the end of this decade, as nine
squadrons of MiG-21 and MiG-27s retire, with just three Sukhoi-30MKI and two Tejas
squadrons due for induction.

In the circumstances, the IAF is extending the life of
two Mirage 2000 squadrons, three MiG-29 squadrons and six Jaguar squadrons for
15-20 years. On Wednesday French vendor, Thales, handed over the first two upgraded
Mirage 2000-I fighters in Paris. Over the next 7-10 years, Hindustan
Aeronautics Ltd (HAL) will upgrade another 49 Mirage 2000s in Bengaluru for Rs
12,100 crore.

Meanwhile, 69 MiG-29 fighters are being upgraded for $964 million; an
exercise that the government says will be completed by 2016.

Now a key IAF concern is to rejuvenate its fleet of
123 Jaguars. In Bengaluru last month IAF boss, Air Chief Marshal Arup Raha,
highlighted the urgent need to put new engines on the Jaguar, a $2 billion (Rs
12,000 crore) procurement that the defence ministry has stalled for years.

The IAF bases two Jaguar squadrons each in Ambala,
Jamnagar and Gorakhpur. Termed “deep penetration strike aircraft”, the Jaguar
is designed for low level strikes against enemy ground targets: air bases, land
forces and warships. Powerful engines are essential, since enemy radars would
pick up the Jaguars’ ingress into enemy territory, and scramble fighters to
intercept them.

Said Raha, “[The Jaguar] is a very capable aircraft,
but it has some shortfalls in terms of engine power. We are also upgrading it
by putting in an auto-pilot and some close combat missiles and an upgraded
navigation system and weapon aiming systems.”

The “re-engining programme” involves replacing the
Jaguar’s underpowered Rolls-Royce Adour 804/811 engines with newer, more
powerful engines. Poised to bag this contract is US firm, Honeywell, whose F-125N
engine generates 43.8 KiloNewtons
(kN) of thrust,
significantly higher than the 32.5 kN of the Jaguar’s current engines.

The defence ministry, however, is reluctant because
Honeywell is the only vendor in the fray. In response to an IAF tender in 2010,
British company Rolls-Royce declined to quote, apparently because it had no
suitable engine. Pratt & Whitney, the other big US engine-maker, was unwilling
to transfer technology.

Ministry sources say Rolls-Royce muddied the water by
lobbying for upgrading the Jaguar’s existing engine, rather than fitting a new
one. With HAL manufacturing the new Adour Mk 871 engine for the IAF’s Hawk
trainer, Rolls-Royce argued it could cheaply build an upgraded Adour engine for
the Jaguar, with many common parts.

After dithering for two years over this proposal, the
defence ministry issued a fresh tender in October 2012, to which Honeywell
offered the F-125N engine, and remains the sole bidder. The MoD remains undecided.

On December 19,
2011, the government stated in parliament that the Jaguar upgrade would be completed
by December 2017. That is a far cry, with the contract still to be negotiated.
Only, after that would Honeywell begin manufacturing the engines.

Sections in the
IAF argue that it is wasteful to fit a powerful, new engine on 30-year-old
fighters, many of which have already flown 4,000 hours of the 6,000 hours
specified as the Jaguar’s service life. Others point out that fighters are
routinely given service life extensions, after inspections of the air frame.

To be sure, HAL
has accumulated a high degree of expertise on the Jaguar, having manufactured many,
overhauled the entire fleet and developed world-class navigational-attack
systems (termed DARIN 2 and DARIN 3) that allow pilots to fly blind to a target
hundreds of kilometres away, and release their bombs precisely.

The Jaguar is also
being equipped with lethal Textron CBU-105 “sensor fuzed weapons”, which the
IAF procured in 2010 through the US government. This weapon, which is usually
delivered over enemy tank concentrations, breaks up into a large number of
smart “bomblets”, which guide themselves to the tanks and penetrate their
turrets from above.

Thursday, 26 March 2015

Indian defence planners have breathed a sigh of relief as
the first two Indian Air Force (IAF) Mirage 2000 fighters being upgraded in
France were handed over by Dassault and Thales to India’s ambassador in Paris,
Arun Singh.

In July 2011, the IAF signed a contract to upgrade its
entire fleet of 51 Mirage 2000 fighters. This would extend the life of the
ageing fighters --- acquired in the mid-1980s to counter
Pakistan’s new F-16s --- by another 15 years. The upgraded fighters are
designated Mirage 2000I, while the twin-seat trainer version is designated
Mirage 2000TI.

The Rs 12,100 crore contract has two components, the defence
ministry told parliament on December 19, 2011: Euro 1,470 million (Rs 10,080
crore) would be paid to French vendor, Thales; while Hindustan Aeronautics Ltd
(HAL) would get Rs 2,020 crore.

That amounts to an upgrade cost per aircraft of Rs 237 crore.

With the Rafale contract in limbo, the upgrade of the IAF’s
Mirage 2000 and Jaguar fighters has become vitally important. The IAF has just
35 squadrons now (with 16 operational fighters and two trainer aircraft in
each), against the 42 squadrons authorized for defending the Pakistan and China
borders.

The two fighters delivered today are likely to arrive in
India in early April and join their respective squadrons. Two Gwalior-based IAF
squadrons currently fly the Mirage-2000: Number 1 Squadron (Tigers), and Number
7 Squadron (Battle Axes).

Meanwhile, HAL is upgrading the next two Mirage 2000s at its
Bengaluru facility, with Dassault and Thales providing “on-the-job training”.
Dassault builds the airframe of the Mirage 2000, while Thales provides most of
the avionics.

Business Standard toured the Mirage facility in HAL in January,
and learned that the third and fourth upgraded fighter would be completed in
September and November 2015 respectively. There are 120-130 technicians working
in HAL’s Mirage 2000 upgrade and overhaul facility in Bengaluru.

HAL would upgrade the remaining 47 Mirage 2000s without
assistance, fitting in upgrade kits provided by Dassault and Thales. This would
take 7-10 years.

While the upgrade does not involve fitting a new engine, it
includes extensive avionics upgrades. Thales is providing a new radar, mission
computer and electronic warfare suite, said the French vendors in a statement
today.

In place of the old analogue instruments in the cockpit, the
pilots will now have an “all-glass cockpit”, with video displays of flight
parameters and weapons aiming and operation. They will also have helmet-mounted
sights, which allow pilots to aim weapons at targets merely by looking at them.

In a linked contract, the IAF has procured 490 MICA “beyond
visual range” missiles from French company, MBDA, for Rs 6,600 crore.

The IAF places high confidence in its Mirage 2000, which
have not just provided high serviceability rates but were also modified for
delivering “precision-guided munitions”, or laser-guided smart bombs, during
the Kargil conflict in 1999.

Alongside the upgrade, HAL is simultaneously overhauling its
entire Mirage 2000 fleet, a year-long procedure that each fighter undergoes
after flying 2000 hours or 13 years, whichever happens first. The entire Mirage
2000 fleet underwent a first round of overhaul from 1991-94. The second
overhaul round began in 2009.

“We have developed a high degree of expertise in
maintaining, overhauling and now upgrading the Mirage 2000”, said a HAL line
manager.

Tuesday, 17 March 2015

In the
afternoon of November 10, within ten minutes of occupying his new office as
defence minister, Manohar Parrikar proclaimed that “transparent and swift
decisions” were his speciality. Since then, he has repeated that boast at least
thrice, alongside other confident promises of policy reform. Yet, not a single important
policy has emerged from Mr Parrikar’s ministry so far, only slipping deadlines
that recall the enervating days of his predecessor, AK Antony. If the previous
defence minister neither spoke nor acted, the current one is quick to promise transformation.
Neither, however, has delivered real change.

At a media conclave
in early December, Mr Parrikar promised ex-servicemen their One Rank One
Pension demand within four to eight weeks. This deadline has been repeatedly
extended, but exasperated ex-servicemen continue to wait. In December Mr Parrikar
also promised a new policy by January that would monetarily penalise, rather
than ban, corrupt arms vendors. That promise has been renewed repeatedly,
including at Aero India 2015 last month. Yet, top helicopter maker,
AgustaWestland, remains excluded from a slew of impending helicopter purchases
(Mr Parrikar estimates the military will need 800-1000 new helicopters over the
next five years), creating single-vendor situations in which India might buy
choppers for hundreds of millions of dollars more than in a procurement where competing
vendors drive down prices. In October, an Italian court threw out the bribery charges
against AgustaWestland. Yet the defence ministry remains frozen, even though
the Central Bureau of Investigation has failed to even file a charge sheet against
AgustaWestland during the past two years.

Mr Parrikar’s
most worrying delay relates to his promise to simplify and rationalise the
“Make” category of defence procurement, under which Indian companies design and
build major defence systems, with the defence ministry reimbursing 80 per cent
of the development cost. Both Mr Antony and Mr Parrikar agree that “Make”
category projects would vitalise Indian defence industry.

Like
elsewhere, Mr Parrikar has overpromised and under-delivered on the new “Make”
procedure. In December, he invited the who’s who of the defence industry to Goa
and assured them of a new “Make” procedure by end-January. The next day, he
told defence journalists in Delhi that the “Make” procedure would be ready “in
the next two-three weeks”. Seven weeks later, Mr Parrikar declared during Aero
India 2015, in February, that the “Make” policy would “crystallise” in March
and be notified by April/May.

Currently, the
government and private defence industry are debating the new “Make” policy,
with private firms determined to wrest parity with the eight defence public sector
undertakings (DPSUs) and 41 ordnance factories (OFs), in whose favour the deck
has traditionally been stacked. To counter the defence ministry’s well-known bias
towards its pet mastodons, the Prime Minister’s Office has asked the Department
of Industrial Policy and Promotion (DIPP) to arbitrate the framing of the new
“Make” policy. Even so, the draft of the new policy, which I have examined,
remains contested. The private sector has told Mr Parrikar that the “Make”
procedure, in its currently proposed form, is destined to fail.

First, the
new policy ignores the private sector’s concern over the debilitating cost of
capital. True, the defence ministry eventually reimburses the “development
agency” (DA) --- the company, or consortium that leads a “Make” project --- 80
per cent of the development cost. However, until the money is reimbursed at
stipulated development milestones, the DA must bear the cost of capital. With
interest costs ranging from 14-16 per cent, industry argues that their putative
20 per cent share actually rises to 40-50 per cent. If the defence ministry
cannot pay up front, private industry wants it to share the cost of capital in
an 80:20 ratio. The government does not dispute the interest cost; but the
draft “Make” procedure disallows “interest” from being included as a project
cost.

Ludicrously,
the defence ministry argues that the US Pentagon’s Defence Advanced Research
Projects Agency, famously known as DARPA, which similarly sponsors small
research projects, does not reimburse interest costs. The private sector retorts
that DARPA reimburses 100 per cent of project cost; and capital costs just
about 2 per cent in America anyway.

Second, major
private firms have protested the dilution of three key eligibility conditions
in the draft policy that could open the doors for foreign defence majors to access
Indian funding under the “Make” procedure. So far, a company was eligible for
“Make” projects only after operating for 10 years; the draft policy halves that
to five years. Earlier, a company required an asset base of Rs 100 crore and
turnover of Rs 1,000 crore to participate; the draft policy only requires a
“positive net worth” that is 5 per cent of the project size. For micro, small
and medium enterprises (MSMEs) the net worth criterion is waived entirely. So
far, the policy required a company to have a defence licence; now it need only
have applied for one. A foreign defence major can win development contracts
with 80 per cent Indian government funding merely by forming a 49:51 joint
venture with an unscrupulous Indian MSME that has had a sleeping company for 5
years.

Third, the
private sector has strongly protested a draconian provision that renders any
company that violates any policy guidelines (and presumably the ministry would
be the judge of that) punishable by a five-year ban from doing business with
the defence ministry. Industry bodies have requested that a ban be limited to
ethical violations, which could be covered under an “Integrity Pact” that
already forms a part of all defence procurement contracts.

“My board would
never allow the company to participate in a development programme where the
company could be excluded from all defence business for a minor procedural
violation”, says a defence firm chief executive officer.

From the
delays and disputes, it appears as if the defence minister is not entirely
clear about what the “Make” procedure intends to achieve --- to create Indian
“system integrators” that own the intellectual property that goes into a
military platform, allowing not just in-country design and manufacture of that
equipment, but also life-cycle support and periodic systems upgrades, all of
which add up to 6-10 times the procurement cost. This is qualitatively more
strategic than simply boosting manufacture to create jobs. So far Mr Parrikar’s
embrace of the “Make” procedure is apparently rooted more in his boss’ enthusiasm
for the “Make in India” slogan than from a hard-eyed realisation that Indian
defence industry needs to be nurtured, hand-held and protected so that it can develop
and supply defence equipment designed and built specifically for India’s
military requirements. There has been enough delay and prevarication. The
“Make” procedure needs to be finalised and at least 15-20 development projects
contracted, for which the Rs 144 crore provided in the defence budget must be
increased substantially.

Friday, 13 March 2015

On Wednesday, the Supreme Court rendered a decision that practically
makes the Armed Forces Tribunal (AFT) the first and the last forum for serving
and retired soldiers, sailors and airmen and their families, sharply
eroding their legal rights compared with other Indian citizens.

The apex court has ruled that AFT verdicts cannot be
challenged before High Courts, as was being done till now. The only recourse
available after the AFT will now be the Supreme Court.

However, in 2012, the Supreme Court has ruled that military
litigants have no vested right of appeal against an AFT judgment. As per the Armed Forces Tribunal Act, 2007, the
apex court can only be approached if a “point of law of general public
importance” is involved or if the issue is important enough to warrant the
attention of the apex Court.

“Most issues before the AFT are not of public importance.
They relate to veterans’ pensions, medical disabilities, etc. Since these
cannot now be taken before the Supreme Court as a matter of right, the AFT has
become the only court for military litigants, effectively denying poor soldiers
the right of judicial review,” says Navdeep Singh, a Chandigarh-based lawyer,
widely respected for his legal services to military veterans.

In contrast, a 7-judge Supreme Court bench had deemed
"unconstitutional" a similar ruling that prevented High Court review
of rulings of the Central Administrative Tribunal (CAT) and State Administrative
Tribunals (SATs).

The AFT was
established in 2009 under the Armed Forces Tribunal Act, 2007, as a
judicial tribunal that soldiers petition for justice before approaching civil
courts.

Legal
experts have questioned the AFT’s independence, since it functions directly
under the Ministry of Defence (MoD). The MoD appoints the judges to the AFT. The
Defence Secretary (who is on the panel that selects AFT judges) is also the
First Respondent in most cases filed by soldiers, sailors and airmen.

In November 2012, the Punjab & Haryana High Court
ordered that the AFT be placed under the Ministry of Law & Justice. An MoD
appeal against this verdict is pending in the Supreme Court.

Right to Information applications have revealed MoD
patronage of AFT judges. As Business Standard has reported (April 2, 2013, “RTI reveals MoD largesse to Armed Forces
Tribunal”) the MoD admitted spending over Rs 67 lakhs for “official foreign
visits” by the then AFT chairperson and members, and having provided them with
unauthorized canteen cards to shop at subsidized military retail outlets. AFT Administrative
Members (military generals on the tribunals) are called to army formations to
“sensitise” them about cases that the were hearing.

Recently a Supreme Court Constitution Bench struck down the
national tax tribunal on the grounds that it was not independent of the
government. Arvind Datar, who was counsel in that case, asserts that Article
226 of the Constitution, which provides judicial review before the High Court,
cannot be struck down.

“Look at the poor soldier and how he would be affected by
such a judgment. A jawan living in Tamil Nadu, or Assam, would have to engage a
Supreme Court lawyer in Delhi, and bear all the expenses of travel in order to
appeal against an AFT ruling. This is completely unfair”, says Datar.

Meanwhile, the MoD's battery of lawyers in New Delhi
continue filing automatic appeals in the Supreme
Court against unfavourable AFT orders. So serious is the problem that
Defence Minister Manohar Parrikar recently pledged to end this practice.

Legal experts point out that, if High Courts can no longer
hear challenges and provide redress, the Supreme Court would directly receive a
flood of appeals, diverting it from its primary task --- to adjudicate on matters
of importance and Constitutional issues.

“Ultimately, defence personnel have become even lesser
citizens than what they already were. Justice will now be neither affordable,
nor accessible. We will request the honourable Supreme Court in other similar
pending matters to refer this issue to a larger bench”, says Navdeep Singh.

Tuesday, 10 March 2015

The defence
budget announced on February 28 has disappointed the army, navy and air force. With
acquisitions in the pipeline worth over Rs 20 lakh crore, military planners protest
that the capital budget allocation of Rs 94,588 crore --- not even a rupee more
than what was allocated in last year’s budget --- is far less than what is
required.

Rs 31 lakh
crore worth of acquisitions are needed over a 15-year period, say top level
sources in the Integrated Defence Staff (IDS), which carries out long term
planning of acquisitions for the three services. This is formalised in the
classified Long Term Integrated Perspective Plan (LTIPP), which compiles the military’s
equipment requirements over the 12th Defence Plan (2012-13
to 2016-17), the 13th Plan (2017-18 to 2022-23) and 14th
Plan (2023-24 to 2027-28).

Budget projections: 2012 - 2027

User

Capital
budget

12th Defence Plan

13th Defence Plan

2012-13

2013-14 (RE)

2014-15 (RE)

2015-16 (BE)

2016-17

2017-18

2018-19

2019-20

Army

10872

10749

16868

21574

23731

26104

28714

31585

Navy

16889

19600

17471

23911

26302

28932

31825

35008

IAF

31053

36017

31818

31481

34629

38092

41901

46091

Other*

11685

12506

15808

17622

19385

21324

23457

25803

Total

70499

78872

81965

94588

104047

114452

125897

138487

Capital
budget

13th Defence Plan

14th Defence Plan

TOTAL

2021-22

2022-23

2023-24

2024-25

2025-26

2026-27

2027-28

34744

38218

42040

46244

50868

55955

61551

499817

38509

42360

46596

51256

56382

62020

68222

565283

50700

55770

61347

67482

74230

81653

89818

772082

28383

31222

34344

37778

41556

45712

50283

416868

152336

167570

184327

202760

223036

245340

269874

2254050

Adding to
the military’s disquiet is the repeated inability of the ministry of defence
(MoD) to spend the capital budget on new equipment. Year after year, chunks of
the capital budget are surrendered unspent, or diverted to the revenue budget
for funding running expenses like military salaries, and maintenance of
equipment.

In the
current year, the MoD has managed to spend only Rs 81,965 crore of the Rs
94,588 crore allocated for capital spending, a shortfall of Rs 12,623 crore. Rs
6,630 crore was returned to the finance ministry, while over Rs 6,000 crore
were diverted to expenses like salaries.

A Business
Standard analysis of equipment requirements over the next 15 years and the
likely fund availability during this period finds a precarious balance between
needs and means.

In the near
term, there is precious little money to meet the three services’ requirement of
Rs 20 lakh crore worth of equipment. However, as the years go by, especially in
the next decade, an expected real increase of 10 per cent per annum will have
allocated Rs 22.5 lakh crore by the end of the 14th Defence Plan in
2027-28 towards the military’s capital budget (see graphic below).

This includes
a cumulative total of Rs 5 lakh crore for the army, 5.65 lakh crore for the
navy, and Rs 7.72 lakh crore for the air force. Another Rs 4.17 lakh crore will
provide capital funding for Defence R&D Organisation (DRDO), Ordnance
Factory Board (OFB), joint staff, army railroads and military land and
buildings.

Given the
army’s requirements of Rs 5.29 lakh crore, that leaves a shortfall of Rs 30,000
crore. The navy will be short of Rs 1.75 lakh crore, given that it must spend
Rs 7.4 lakh crore. The air force alone might have the money it requires, with
budgetary projections providing it Rs 7.72 lakh crore to meet its equipment
requirements of 7.28 lakh crore.

These
projections assume that the distribution of funds between the three services
remains static. In fact, the share of the navy has steadily grown over the
years, rising from barely 5 per cent of the overall defence budget to 16 per
cent today. The military implications of a “Look East, Act East” policy might
result in further increases to the navy, with some analysts predicting that the
navy’s allocations might inch up to 20-23 per cent of total military spending.
That would come at the cost of the army and air force.

Future
budgetary projections are always uncertain, and Lieutenant General Anil Chait,
who coordinated tri-service budgetary and acquisition planning until he retired
as chief of the Integrated Defence Staff (IDS) last May, points out that Business
Standard’s funding projections assume low inflation and a stable rupee. With 60
per cent of the military’s equipment requirements being sourced from abroad, any
significant rupee devaluation would indeed buy less bang for the Indian buck.

Even so,
financial planners within the military admit that, given the current inflation
environment and a stable rupee, these calculations are probably realistic.

Army: battling for modernisation

System

Cost

Remarks

(Rs crore)

145 ultra light howitzers

5000

1580 towed artillery guns

15750

Cleared in Nov 2014

814 mounted gun systems (MGS)

4700

100
tracked self-propelled guns

3000

414
Dhanush guns from OFB

2000

2 regiments Pinaka rocket launchers

5000

Brahmos missiles

3500

Strategic missile systems (nuclear capable)

20000

Armour upgrade and new tanks

10000

T-72, T-90 and Arjun

Future Main
Battle Tank (FMBT)

60000

1000
new tanks

Future Infantry Combat Vehicle (FICV)

60000

2600 new ICVs

Short Range Surface-to-air Missile (SR-SAM)

30000

Develop and produce

Tactical
Communications System (TCS)

20000

Under
“Make” category

Battlefield Management System (BMS)

50000

Under “Make” category

Rifles, carbines, machine guns and sights

12000

Future Infantry Soldier as System (F-INSAS)

10000

Under “Make” category

Unmanned
Aerial Vehicles (UAVs)

6000

Dedicated army mobile networks

3000

Anti-tank
guided missiles

10000

300
Spike cleared

Surface-to-air missile systems

30000

SR-SAM and Akash

Miscellaneous gear, arms, ammunition

100000

Raising of mountain strike corps (MSC)

70000

Estimated cost

TOTAL

5,29,950

While the
army remains the service most in need of modernisation, land systems in general
are significantly less expensive than aircraft and naval equipment. A large
chunk of the army’s modernisation budget will go towards procuring, or
indigenously building, modern howitzers, rocket launchers and various missile
systems. There will be large expenditure on modernising the army’s mechanised
forces, including the indigenous development and production of a Future Main
Battle Tank (FMBT) and Future Infantry Combat Vehicle (FICV).

Also being
developed indigenously is the digital backbone for a “networked force”, which
will include communications and data networks like the Tactical Communications
System (TCS), as well as soldier-specific networks like the Battlefield
Management System (BMS), which was kick-started last week. Besides these
high-tech systems, the army will also spend on basic combat equipment,
including new rifles, carbines and machine guns.

Another big army expenditure will involve raising a new mountain strike corps (MSC) for
offensive tasks on the mountainous northern border. While the government had
announced it would spend Rs 67,000 crore on this new formation, most of that
money remains to be allocated.

Navy: trouble at the seas

System

Cost

Remarks

(Rs crore)

Six
Scorpene submarines (Project 75)

10000

Balance
payment

Six conventional submarines (Project 75 I)

60000

Being processed

Lease of INS Chakra from Russia

4200

Lease payments

Lease of second nuclear sub from Russia

5400

Lease payments

Two Arihant-class nuclear submarines

36000

INS Arihant follow-ons

Six nuclear-powered attack submarines

100000

DRDO project

Seven stealth frigates (Project 17A)

45400

MDL and GRSE to build

Four anti-submarine corvettes (Project 28A)

5000

Balance payment

Three stealth destroyers (Project 15A)

22000

INS Kolkata delivered

Four stealth destroyers (Project 15B)

30000

Two indigenous aircraft carriers

50000

Cochin Shipyard

Six Fleet Support Ships (FSS)

24000

150
Naval Utility Helicopters

15000

139 Naval Multi-Role Helicopters (Navy)

60000

First 16 being procured

8 Medium Range Maritime Recce (MRMR) aircraft

6000

8 P8-I Multi-Mission Maritime Aircraft (MMA)

12000

Deliveries began from December 2012

4 additional P8-I Multi-Mission Maritime Aircraft (MMA)

6000

8 procured earlier

4-6
Landing Platform Dock (LPD)

16000

24 Mine Counter Measure Vessels (MCMV)

36000

To be built in India

2 midget submarines for special operations

2000

Building in HSL, Vizag

12 Dornier aircraft

1850

Building in HAL Kanpur

10 Submarines overhaul

10000

16 ASW Shallow Water Craft (ASWC)

16000

Naval LCA Tejas development cost

3000

Including Mark II

65
Tejas fighters

12000

Miscellaneous gear, arms, ammunition

100000

Development of Karwar Naval Base

50000

West coast base

Development of Rambilli Naval Base

100000

East coast base

Development of Andaman & Nicober Comd

25000

TOTAL

7,40,000

The navy’s Maritime Capability Perspective Plan (MCPP) envisages
a 160-ship force that is centred on 90 capital warships, like aircraft
carriers, destroyers, frigates and corvettes. While there are currently more
than 140 vessels, the navy has barely half the destroyers and frigates it
needs. About five ships need to be inducted each year just to replace warships
that are decommissioned after completing their 30-40 year service lives. Much of the navy’s modernisation budget,
therefore, would go towards constructing new warships and submarines.

Submarines
will form a thrust area. These include twelve conventional submarines, of which
six Scorpenes would start rolling out of Mazagon Dock Ltd next year. Another
six will be built in India along with a foreign partner shipyard. The DRDO will
build another two nuclear missile-carrying submarines of the Arihant class
(SSBNs); and develop and build six nuclear-powered attack submarines (SSNs) in
India. INS Chakra, the SSN leased for ten years from Russia, will be joined by
a second leased SSN.

Capital
warships are being built in numbers, including seven stealth frigates under
Project 17A; four stealth destroyers under project 15B; two indigenous aircraft
carriers, INS Vikrant and Vishal, and four anti-submarine warfare (ASW)
corvettes under Project 28A. In addition, the navy will acquire six fleet
support ships (FSS), 4-6 landing platform docks (LPDs) for amphibious assaults
on enemy coast lines, 24 mine counter measure vessels (MCMVs) to guard against
sea mines laid by the enemy outside our ports, harbours and on shipping lanes.

A hefty
chunk of expenditure will go towards developing a brand new naval base on the
Andhra Pradesh coast at Rambilli, which will be the key operational base for
the Eastern Naval Command. Money will also be spent on the Western Naval
Command’s premier new base at Karwar, and on naval facilities in the Andaman
& Nicobar Islands in the Bay of Bengal.

Air strike capabilities

System

Cost

Remarks

126
Rafale medium fighter

120000

Under
negotiation

LCA Mark II development cost

2500

123 Tejas fighters

20000

125 Jaguar re-engining and upgrade

18000

51
Mirage 2000 upgrade

15000

80 Sukhoi-30MKI production

30000

Balance remaining

272 Sukhoi-30 overhaul

30000

Fifth generation fighter development

30000

Partnership with Russia

144
Fifth generation fighters production

65000

In
Russia and India

150 Advanced Medium Combat Aircraft

100000

Develop and build

Multi-role Transport Aircraft development

5000

Partnership with Russia

45
Multi-role Transport Aircraft production

6750

In
Russia and India

56 Avro aircraft replacement programme

15000

60 Hawk
advanced jet trainers

6000

22 Apache AH-64E attack helicopters

8500

15 Chinook CH-47F heavy lift helicopters

6600

126 Basic trainer aircraft (BTA)

5000

Pilatus and HTT-40

85
Sitara intermediate jet trainers (IJT)

8500

Being
built by HAL

384 Light Utility Helicopters (LuH)

13500

To be built in India

80 Dhruv/Rudra
advanced light helicopters

4000

Being
built by HAL

Surface-to-air missile defences

30000

MR-SAM and Akash

Miscellaneous gear, arms, ammunition

200000

TOTAL

7,28,350

With just
35 fighter squadrons operational presently against the air force’s authorised
strength of 42 squadrons; and with another 11 squadrons likely to be
decommissioned before the end of the 13th Defence Plan, the air
force’s focus is on acquiring fighter aircraft. Besides the Rafale medium
multi-role combat aircraft (MMRCA), it will buy six squadrons of Tejas light
fighters; 80 more Sukhoi-30MKI fighters under an existing contract; and upgrade
its fleet of 50 Mirage 2000 and 125 Jaguar fighters. There is an Indo-Russian
development programme under way for 144 fifth generation fighter aircraft
(FGFA); and another DRDO development project for at least 150 advanced medium
combat aircraft (AMCA).

Transport
aircraft are another thrust area, including the Indo-Russian programme to
develop a multi-role transport aircraft (MRTA); the replacement of 56 Avro
HS-748; and the on-going procurement of C-17 Globemaster III heavy lift
aircraft from the US. In addition, the air force is procuring large numbers of helicopters,
including the billion dollar purchases of the Apache AH-64E attack helicopter
and the Chinook CH-47F heavy lift chopper.

These
procurements do not include a host of high-tech development projects that are
planned for developing the battlefield capabilities of the future --- space
surveillance; launch-on-demand satellites; hypersonic vehicles that will
translate into more effective strike vehicles; electronic warfare systems;
cyber warfare capability; active armour; active counter-IED technologies,
unmanned combat aerial vehicles to replace manned fighters and a range of
drones that have precision strike capabilities. The DRDO also has programmes
under way to develop high altitude long endurance (HALE) and medium altitude long
endurance (MALE) drones, long range cruise missiles and an anti-ballistic
missile shield to shoot down incoming nuclear-tipped ballistic missiles.

None of
these have been budgeted for, except through the DRDO’s budget. However, in a
15-year perspective, some of these projects might will reach fruition, and
their introduction into service would require additional funds.